01 Oct A more strategic role for the Company Secretary
This year more than ever, Company Secretaries have been at the heart of the effort to keep boards operating effectively. Shifting the whole governance structure to function remotely has been a huge challenge. What’s more, we expect to see investors and regulators wanting evidence that corporate governance has held up under the pressure – so the Company Secretary will be even more to the fore. Doing our board evaluations, we’ve seen lots of examples of CoSecs who have stepped up their game, showing great imagination in the ways they have enabled boards to continue, or even improve, their work. These are our reflections on how boards, management and CoSecs can continue to get the most out of the role – and what doesn’t work so well.
Good practices to consider…
Recognise the importance of the role – maybe through having a specific discussion about the role the board and executive would like the CoSec to play over the coming year. Company Secretaries can be undervalued because so much of their work is behind the scenes. But home in on what they are actually doing, and they are the “glue holding things together”. Our reports often pick up on development points that CoSecs have highlighted in the past but been unable to push through.
Things to avoid…
Failing to fully leverage the CoSec’s skills and knowledge. It’s surprising how often we see the role undervalued or overburdened. Or, worse, some organisations won’t have a dedicated CoSec, instead relying on a position that is part-time, covered by several people, outsourced, or combined unsuitably with executive roles.
Good practices to consider…
Enable the CoSec to act strategically. Exceptional boards discuss the topics which matter most at exactly the right time. They are often able to do so largely because of strategic planning led by their CoSec. This means working with chairs and committees to create a sensible annual cycle. It’s about ensuring discussions are pitched at the right level, and being calculating about what goes onto which agenda and when – in agreement with the Chair and CEO of course!
Things to avoid…
Treating CoSec as mainly an admin role. Of course it’s important that there’s a person or team to organise meetings and ensure board papers are circulated. But limiting expectations to the administrative basics is a missed opportunity. During the pandemic, most boards relied heavily on the agility of CoSecs to implement change, fast. And things that were already tricky – NED recruitment, planning, paper organisation – have needed new approaches. Many have expanded the critical role they play in the start-to-finish board process.
Good practices to consider…
Spend time on the CoSec-Chair-CEO relationship – if you’re part of that web (and that includes committee chairs too). CoSecs require the Chair’s backing for the clout to get things done. Chairs need a right-hand person to keep on top of everything. And CEOs need chemistry with both in order to build trust and good communications with the board in general. So regular liaison across this trio needs to be facilitated by the CoSec.
Things to avoid…
Neglecting the CEO element of the triumvirate. It takes vigilance from both CoSec and Chair to ensure that their regular conversations don’t slip into territory which should be covered as a three. The Chair, CoSec and CEO should be getting together to work through forthcoming agendas and heading off problems at the pass. This three-way trust is a hard thing to get right and depends on balancing the personalities in question. But the key thing is regular, open communication.
Good practices to consider…
Expect an active CoSec in board meetings. In the best virtual meetings we have seen, there has been an obvious bilateral conversation between the Chair and the CoSec, with the CoSec prompting when someone has their hand up, an item is running over time, or when they sense a break is needed. This can make a big difference to both the efficiency of meetings and the quality of discussion.
Things to avoid…
Looking to the CoSec for input principally on process. Often CoSecs will have expertise, observations or exposure relevant to all sorts of issues which arise in board meetings. They are the guardians of good board governance. But they need the space and consent of the board to make a full contribution. And they need guidance from the Chair around where and how they can help in the meeting. Trying to go it alone, particularly in a virtual meeting, is a big ask even for the most adept Chair.
Good practices to consider…
Look to the CoSec to help frame excellent board-executive interactions. One important tool for this is, of course, the board paper. Paper preparation is a chance to ensure management are giving the board what they need for generating good discussion. But CoSecs can look to enhance this relationship in other ways, from checking in with NEDs between meetings and helping them understand in advance any major constraints management have been facing, to priming management on the NEDs’ expectations and needs before they start constructing papers. Both parties appreciate feeling connected and well-informed.
Things to avoid…
Focusing only on interactions around paper preparation. While it’s vital that paper authors get help from the CoSec to frame topics in a way which will work for the board, this is only one aspect of a wider role. The CoSec is at the heart of a continuous and active process of governance. In order to keep governance in top shape, the CoSec and the board will need to think through how NEDs can stay informed and engaged between meetings – without encroaching on management territory or time.
Good practices to consider…
Support the CoSec’s push for timely and effective board packs. Paper quality and timing can make an enormous difference to effectiveness. But for a CoSec to be able to say to a paper author “if this is not in on time it will not be included” or “you need to get the positioning right”, they need the understanding and vocal backing of the board, and the CEO in particular.
Things to avoid…
Accepting sub-standard or late board packs. Or simply failing to give any feedback at all. Usually it’s a case of NEDs needing a break at the end of the meeting and not getting round to sharing their views. So the cycle of frustration repeats itself. But it’s hard for CoSecs to drive change through without visible support from those who can push for it. An under-supported or under-resourced secretariat function will find it hard to guide management in positioning papers and to enforce paper deadlines.
Good practices to consider…
Give the CoSec explicit guidance on what is expected of the minutes. The CoSec needs an agreement with the board on the level of detail required, how to demonstrate that the board is meeting its responsibilities through the minutes, how actions are tracked and when the minutes should be circulated and approved. Preparing good minutes is an onerous and time-consuming task and the CoSec deserves to know what is expected before embarking on the drafting.
Things to avoid…
Providing reams of comments on the minutes when the draft is circulated because they are not quite hitting the mark. And grumbling about the fact that they are circulated long after the meeting has taken place. These might indicate different issues such as a lack of alignment in the board on what the minutes should look like or a seriously under-resourced CoSec team that is struggling to stay on top of an increasing workload.
Good practices to consider…
Help make sure the CoSec function is properly resourced – especially now in the Covid-19 environment. As governance demands continue to grow it’s increasingly difficult for CoSecs to manage without good support. Cuts here are a false economy; “savings” will be accompanied by a loss of effectiveness in the whole board process and by the risk of weaker decision-making. Health and wellbeing should be a consideration too. It is too big a risk not to support the secretariat, and therefore the board, well.
Things to avoid…
Assuming that support is just extra staffing. Software and board technology have played a key role in recent months. Where boards haven’t invested in good tools for the secretariat, the wasted person-hours have come back to bite. Make sure CoSecs have the technology – board portals, project management, hardware – and training they need.
Good practices to consider…
Discuss with the CoSec how to plan differently for 2021. That’s mainly for the Chair, committee chairs and the CEO, but others might want a say too if they think something’s missing. CoSecs need to challenge themselves, management and boards when it comes to planning meeting time for the coming year. The best sequencing of meetings, the crucial topics, and the right forum for discussions may all look quite different.
Things to avoid…
Sticking with last year’s annual plan. A key skill for CoSecs is horizon scanning – anticipating incoming trends, developments and regulations. The coming year will mean tackling new challenges – Brexit and supply-chain resilience, remote working and mental health, climate reporting – but these are not all unpredictable.
Good practices to consider…
Highlight opportunities for CoSecs to develop through performance feedback from across the board. Retaining a great CoSec means ensuring they have ways to keep growing, whether that is in how their work relates to investor relations, or control functions or something else. Formal recognition and development are so important for senior professionals in an often under-the-radar role. And if you’re recruiting, advertise a capacious, expandable role.
Things to avoid…
Ignoring CoSec succession. This can be a major key person risk. Boards often don’t realise everything a CoSec is doing until they aren’t there anymore. This sometimes even includes providing expert advice and support to committees. So include them in succession plans, and make sure there’s a development plan to help keep them in post in the first place.